Gun buyers have long demonstrated a tendency to stock up on weapons and ammunition ahead of possible changes to gun laws, and a so-called “Obama surge” in gun sales kicked off in the lead-up to Barack Obama’s first election victory in 2008.

There was a similar pick up in 2012 as a second Obama victory looked likely, and another rush on stores when it became clear the Obama administration would push for tighter gun control laws in the wake of the Sandy Hook school shooting last December.

In fact, the rush beginning in December has been high even by historic standards: the FBI conducted just under 2.8 million background checks on prospective gun buyers in December 2012, the highest number in any single month since records begin in November 1998. That’s more than triple the number it was running in in December 2002.

And the rush has continued through 2013 so far. Here’s the number of monthly background checks in the first three months of each year since 1998. This year looks set to be the busiest ever.

Since the Newtown school shootings last Friday, there has been a rising chorus of calls for tighter gun control, from President Obama saying he will use “whatever power this office holds” to prevent future massacres, to Sen. Joe Manchin of West Virginia, a strongly pro-gun Democrat, saying it is “time to move beyond rhetoric” on gun laws.

This is hitting the shares of major gun makers. Sturm, Ruger & Company is down almost 7% since last Friday, when the shooting happened. More on this after the jump. Read More »

Gun sales rose in the lead-up to Barack Obama’s 2008 election victory, as enthusiasts stocked up ahead of what they feared could be tightening gun laws. And as the WSJ reported back in September, this year has been no different, with sales up in advance of the vote and dealers predicting a secondary surge in the wake of an Obama victory.

Obama is not yet through his first term, but the federal government already has conducted about as many background checks for gun owners and prospective buyers on his watch as it did during the first six years of George W. Bush’s presidency. In the first 3 1/2 years of the Bush administration, the FBI conducted about 28 million background checks. During the same period of the Obama administration, the FBI conducted more than 50 million. The gun industry uses the number of background checks on gun owners as a reliable indicator of demand.

Ruger and Smith & Wesson represent nearly 30 percent of the U.S. gun manufacturing industry and lead the market in production of pistols and revolvers, according to government statistics. The two companies have been running production lines around the clock, hiring workers and operating at maximum capacity, said Barrett, an industry analyst who also owns Ruger stock.

Ruger’s sales have increased 86 percent since Obama took office, and Smith & Wesson’s sales have gone up nearly 44 percent, compared with 18 percent for overall national retail sales.

Whether such strong demand will be sustained in the coming years is a topic for debate; in today’s results statement, Smith & Wesson reported its order backlog has dropped 15% over the last quarter. That backlog of unmet demand from dealers is still more than 120% higher than it was at the same time last year, but the quarter-on-quarter decline has some investors thinking the glory days may be coming to an end. As the WSJ’s Kevin Kingsbury wrote today:

The post-election jump in shares of Smith & Wesson (SWHC) has now been fully reversed today as investors sell off despite the gun maker giving an upbeat F3Q forecast as part of its 2Q report. The $106M drop in backlog so far this FY to $333M “appears to indicate dealers who place such orders do not expect the now year-long industry demand surge to last that much longer,” says Wedbush. But SWHC bull Benchmark contends, “Firearms sales growth began before the ‘Obama surge’ and we believe should continue after it.” Shares have trended lower through the day and are now off 9.4% at $9.83 after opening at a fresh 5-year high of $11.25. The stock has more than doubled this year. Read More »